Mr. Speaker, the Canadian standard for anti-theft vehicle immobilizers is recognized as the best in the world, yet Transport Canada has published its intent to adopt the much weaker European standard that can be compromised by car thieves using the simplest of tools.

The Canadian standard makes it very difficult to steal vehicles as the systems have proven to be almost impossible to compromise.

My question is for the Minister of Transport. Why is Transport Canada considering adopting an inferior European system?

Mr. Speaker, my question is with regard to the budget of the Governor General. Since the appointment of the current Queen's representative, some expenses related to her operations or travel have been channeled through other departments such as foreign affairs.

Now that her budget has been cut, will expenses of equal or greater value be rerouted through any other government accounts for the remainder of the budget year?

Reg AlcockLiberalPresident of the Treasury Board and Minister responsible for the Canadian Wheat Board

Mr. Speaker, if the hon. member is referring to the expenses appropriated to the Governor General, the answer is no. Her travel that was supported through the departments had already been cut back. Her overall budget had already been cut back in the budget review earlier this year. This additional 10% cut in the last quarter is on her operating budget for Rideau Hall and the activities which she undertakes as Governor General. She will have to address that. It is 10% in the last quarter.

I would like to ask the government House leader if he could tell the House what we will do on January 31 when we come back here, so we can get primed. We know we will have a very busy vacation, and hopefully we will all get a bit of a rest.

We are anxious to come back. We would like to know what we will do for that first week.

Mr. Speaker, when the House returns, it will take up the business that normally would have been debated for most of the second half of this week, namely the annual prebudget debate itself. We will then turn to bills that have been reported from committee or introduced in the last few days.

Thursday, February 3 will be an allotted day.

I would also like to take this opportunity to congratulate the Speaker as the longest serving member for Kingston and the Islands since Confederation.

Mr. Speaker, I appreciate the opportunity to speak on Bill C-33, the budget implementation act, 2004, for second reading today. The bill implements many of the income tax measures that were introduced in the 2004 budget. It also contains proposed legislation included in the budget related to the air travellers security charge and a sales tax agreement between the Government of Quebec and certain interested Indian bands.

I will touch on each of these issues in more detail, but first I would like to begin my remarks with a brief overview of the 2004 budget, which will provide the context for the measures in this bill.

Budget 2004 was introduced as a focused budget with two clear objectives. One was to provide responsible and prudent financial management and the other was to give tangible shape and focus to the vision, presented in last February's Speech from the Throne, of strengthening Canada's social foundations, building a 21st century economy and restoring Canada's place of pride and influence in the world.

This ambitious agenda includes: living within our means by balancing the books, controlling spending, continuing to reduce debt, and enhancing financial management and accountability; giving Canadians greater means to enhance their well-being by taking important new steps in key areas such as health care, learning and communities; and giving Canadians the opportunity to succeed, to enlarge their ambitions and pursue their dreams.

Prudent budget planning has been the cornerstone of Canada's economic track record in recent years. This approach has allowed the government in budget 2004 to take realistic but far-reaching action to build a new agenda for Canadian achievement.

It is, however, an agenda for a government that lives within its means, providing better value for the taxpayer's dollar while making investments needed to help Canadians enhance their well-being and the well-being of their families.

This brings us to the legislation that is before us today. Bill C-33 is comprised of three main parts: amendments to the Air Travellers Security Charge Act; amendments to the First Nations Goods and Services Tax Act; and amendments to the Income Tax Act and related acts. If I may, I would like to outline those measures, beginning with the air travellers security charge.

As hon. members will recall, in response to the events of September 11, 2001, the December 2001 budget allocated $7.7 billion through 2006-07 for a comprehensive plan to enhance personal and economic security for Canadians. This amount included $2.2 billion to make air travel more secure in accordance with rigorous new national standards, including the creation of a new federal air security authority, the Canadian Air Transport Security Authority.

At the time the air travellers security charge was announced, the government indicated that it would review the charge over time to ensure that revenue remains in line with planned expenditures for the enhanced air travel security system through 2006-07.

Following up on this commitment in budget 2003, the government reduced the charge on round trip domestic air travel to $14 from $24, a reduction of 40%.

Based upon updated revenue and expenditure projections, this budget proposes further reductions as follows: for air travel within Canada, the charge is reduced to $6 from $7 for one way travel, and to $12 from $14 for a round trip; for trans-border air travel, which essentially includes travel between Canada and the U.S., the reduction is to $10 from $12; and for other international travel, it is down to $20 from $24.

These reduced charges would apply to tickets purchased after April 1, 2004. The government will continue to review the charge over time to ensure that the revenue from the charge remains in line with the expenditures on the enhanced air travel security system.

The second part of the bill deals with first nations people. The government has expressed its willingness to put in effect taxation arrangements with interested Indian bands. To date the government has entered into taxation arrangements allowing nine first nations to levy a tax on on-reserve sales of fuel, tobacco products and alcoholic beverages. Canada and the eight self-governing Yukon first nations have entered into personal income tax collection and sharing agreements.

In 2003, the government introduced legislation to provide authority to interested first nations to levy on their lands a first nations goods and services tax that is fully harmonized with the federal goods and services tax. The government is also prepared to facilitate the establishment of taxation arrangements between provinces, territories and interested first nations.

In that regard, Bill C-33 proposes amendments to the first nations goods and services tax to facilitate the establishment of taxation arrangements between the Government of Quebec and interested first nations bands situated in Quebec.

The purpose of this initiative is to help those first nations achieve a greater degree of self-reliance and self-government. Hon. members may be assured that this government remains willing to work with interested first nations on putting these types of arrangements in place.

Part 3 of Bill C-33 introduces a number of income tax measures. Time does not permit me to describe all the measures contained in the bill. I would, however, like to outline some of the initiatives that are integral to the government's priority of ensuring that we have a fair and effective tax system.

For example, in Bill C-33 we introduce tax relief for Canadian Forces personnel and police deployed to international high risk operational missions. We improve tax fairness for persons with disabilities and those who care for them. We make the tax system fairer and improve the tax treatment of small businesses. We introduce a new regulatory regime for registered charities.

If I may, I would like to discuss the measures with respect to Canadian Forces personnel, which provide tax relief for Canadian Forces personnel and police deployed in international high risk operational missions.

Canada's military and police serving on international missions provide testimony to Canada's commitment to world peace and stability. They serve on important missions around the globe, working in partnership with the United Nations and our NATO allies. The budget provides special recognition of these brave Canadians.

Effective January 1, the employment income that these individuals earn while deployed on those missions will be exempt from income tax. This tax relief will apply on income up to the highest level of pay earned by a non-commissioned member of the Canadian Forces. It is important to note that this tax initiative includes the extension to additional missions announced on April 14, 2004.

The Government of Canada views greater inclusion of Canadians with disabilities as a national priority. Greater inclusion contributes not only to the well-being of persons with disabilities themselves, but also to the life and economy of the communities in which they learn, work and volunteer.

That is why budget 2004 includes measures to help persons with disabilities, building on past actions taken by the government. Specifically, this includes provisions to allow caregivers to claim more of the medical and disability related expenses they incur on behalf of dependent relatives and to allow a tax deduction for the costs of disability supports required for employment or education, such as talking textbooks or sign language interpreters.

The second measure acts on an early recommendation of the technical advisory committee on tax measures for persons with disabilities.

The government recognizes that entrepreneurs and small businesses are a key source of economic growth and job creation in Canada. The initiatives contained in the bill reflect the government's commitment to helping entrepreneurs and small businesses succeed through supportive tax, regulatory and contracting policies.

It is important to mention that the suggestions from entrepreneurs and small businesses have formed an important part of the budget consultation process over the years. Indeed, the government welcomes all suggestions that support the emergence and growth of small businesses in Canada.

I will briefly touch on two of the income tax related measures contained in the bill that affect small business.

First, the government recognizes that it can sometimes take many years before new businesses begin to earn profits. Small businesses have submitted representations that the existing seven year carry-forward period for business losses is not long enough, particularly for new businesses undertaking risky ventures.

In response to that concern and to provide additional support, particularly in the small business sector, this bill proposes to extend the non-capital loss carry-forward period of all taxpayers to 10 years.

Second, hon. members may be aware that a lower federal corporate tax income rate of 12% applies on qualifying small business income.

This bill proposes a measure to help small businesses retain more of their income for reinvestment and growth. Accordingly, the bill accelerates a previous initiative to increase the amount of eligible income for the 12% small business tax rate provided to small businesses.

This means that small businesses will have access to a $300,000 limit by 2005, two years sooner than previously announced.

Canadians depend on community based non-profit organizations that have activities as diverse as education, culture, the arts, the delivery of social services, faith, international aid, health, and the environment.

Although some of these charitable organizations rely on volunteers while others have paid employees, they are similar in that they work for the greater good of communities of all sizes in every region of the nation. In recognition of their contribution to the well-being of Canadians, budget 2004 contains a number of initiatives that benefit the voluntary sector of the social economy.

The 80,000 charities registered under the Income Tax Act form a significant part of Canada's voluntary sector. These charities deliver social services and financial support tailored to meet the diverse needs of individuals and communities. Canadians recognize the value of charitable giving and the important contribution that Canada's registered charities make toward improving quality of life.

Canadians must be able to donate to charities with full confidence that their moneys will be spent on charitable programs and services. Registered charities, for their part, need to know that the rules are clear and are administered fairly and transparently. They must also have the flexibility to effectively manage the gifts entrusted to them by Canadians.

Budget 2004 proposes significant changes to the tax rules for registered charities that will help advance these goals. Let me explain.

First, the budget responds to the 75 recommendations of the joint regulatory table, a key component of the voluntary sector initiative that was launched in 2000 by the government. These recommendations relate to the improvements to the rules governing charities under the Income Tax Act.

Budget 2004 responds to the large majority of these recommendations concerning registered charities by proposing: first, a new compliance regime; second, a more accessible appeals regime; and third, improved transparency and more accessible information.

The government will invest $12 million a year to implement these reforms.

This is not all that the 2004 budget measures contained in Bill C-33 offer to assist charitable organizations. The bill also takes important steps to improve the rules that determine the portion of charitable donations that registered charities must devote to delivering charitable programs and services, including proposals to support more effective gift management practices by charities. These proposals will help ensure that capital endowments can provide a stable and sustainable flow of funds for the delivery of charitable programs and services.

Finally, as I mentioned at the outset, budget 2004 was introduced as a focused budget plan with two clear objectives, one to provide responsible and prudent financial management and the other to give focus to the vision of strengthening Canada's social foundations and building a stronger economy.

The vicious cycle of chronic deficits has been shattered and Canadians now enjoy the benefits of a virtuous circle. This has led to increased confidence in the Canadian economy, lower interest rates and the robust growth of well-paid jobs.

As the Prime Minister said in the response to the October Speech from the Throne, “The virtuous cycle enables us to lower taxes in an equitable way and to invest in social programs. We will continue in this vein.”

The measures contained in this budget before us today speak to the Prime Minister's words. Therefore, I urge all hon. members to support Bill C-33.

Mr. Speaker, I thank the member for highlighting the elements of the implementation bill.

I am seeking some amplification on one item from the member. It has to do with the corporate tax points on the extension of the non-capital loss carry forwards from, I believe it was seven years to 10 years.

This matter had been discussed for a number of years, even back when I was on the finance committee in the early 1990s. It had to do with whether or not the public was to be on the hook for mismanagement of corporations any further than the seven years. It was a matter of how many years was reasonable to take into account. It could be economic downturn or extraordinary circumstances which businesses were not able to protect themselves against.

There is this question at some point in time that businesses may have made bad business decisions, may have experienced mismanagement, the cost of which effectively would be transferred more to the taxpayers than otherwise would because of the extension.

I wonder if the member could give us a little insight as to why there is the extension to 10 years.

Mr. Speaker, the hon. member raises a good question and one which deserves a full answer.

The answer is that a loss is a loss is a loss. Whether the loss occurred because of a downturn in the economic cycle, whether it became a loss because of poor planning, or whether it became a loss because of poor management, it is still a loss. I do not know that the Income Tax Act actually recognizes why people lost money, but they did in fact lose money.

The only extension is the additional three years and whether the losses that occurred in the previous seven years had to do with poor management, poor planning, or whatever, I think the same losses apply to the previous seven years as do now apply to the additional three years.

I hope that is a response to what was a thoughtful question. The member has literally served on the finance committee for years and years and has made a major contribution to the function of that committee.

The House resumed consideration of the motion that Bill C-33, A second Act to implement certain provisions of the budget tabled in Parliament on March 23, 2004, be read the second time and referred to a committee.

Mr. Speaker, I listened with interest to the hon. member's speech. One of the things which he brought out quite clearly was that mistakes of the past should not be visited upon the future, as we would say, and that we always try to improve our legislation to make sure that any wrongdoings in the past are corrected. I agree with the member on that.

In light of that, I will ask him, has he now changed his mind in relation to the fact that poor interpretations of regulations in the past have seen provinces, particularly resource rich provinces, being robbed of their resources? Should commitments to change be done as soon as possible to make sure that these benefits go to the people who are deserving in the first place?

Mr. Speaker, I did not realize that the hon. member was so interested in my speech. It is unique on his part.

He has asked something of a generic question which I am having trouble relating to my actual speech. Assuming that somewhere in it there is some relationship to the actual question asked, I would not claim perfection for the government. I am sure that my hon. colleague would similarly see that this is not a perfect government. However, my argument would be, and I doubt my hon. colleague would agree, that this is a good government. When we see errors, egregious mistakes, things that could be done better, we do respond in an expeditious fashion. I am sure my hon. colleague would agree with that.

Mr. Speaker, it is my pleasure to rise and address Bill C-33, the budget implementation act for 2004.

First, I want to wish all members a very merry Christmas and a happy new year. It will be my last chance to do that before we adjourn.

Let me get to the matter at hand, which is the bill that is part of the March 2004 budget. There are a number of initiatives in it that are very supportable. In fact I spent a fair bit of time with finance officials talking about some of these things. I generally agree with many of the measures in it. Some of them are certainly overdue and they are very welcome.

My problem is not that the government is doing these things; my problem is that the government is not doing enough. If we look at some of the things that are being proposed, the government is basically talking about small ways in which it wants to reduce the tax burden that people have to carry, in small ways to help out. That is fine as far as it goes, but put in context set against the situation Canada is in today, it is just not good enough.

When the parliamentary secretary spoke earlier today on a different bill, on a tax treaty, I said to him that there was nothing wrong with the bill, but my point was that we should be introducing bills in this place where we are actually bringing about substantial tax relief. That is not what is happening in this bill or in any other bill that has been brought forward by the government. That is very disappointing.

I want to talk about that in the context of the parliamentary secretary's speech. He talked about how the government recognizes the importance of small business for instance. He mentioned that in his speech. I thought, I just do not believe that; I just do not believe that the government recognizes the contribution of business.

The reason I say that, and the parliamentary secretary knows this, is that before the finance committee this year, dozens of people came forward and said, “Do you not recognize that we are in the middle of what amounts to a productivity crisis in Canada?” Over and over again witnesses would come to us and say, “You have got to do more. You have got to be aggressive when it comes to addressing this productivity problem that we have”.

My colleague from Peace River mentioned it. I thought he said it well. He said that we are sleepwalking toward mediocrity in Canada. I agree with him. That is a very good way of putting it. What we mean by that is in Canada today our standard of living is stuck at about 85% of that of our largest trading partner. The reason is that we have not taken the public policy decisions that would allow our economy to operate at full capacity, to create more jobs, to create better paying jobs, to raise the standard of living, to provide government with more and more revenues to deal with some of the big social problems that we have today and other ones that will be coming at us down the road when we hit that demographic wall in about 10 or 15 years.

We heard this I do not know how many dozen times at the finance committee. However we just do not see it reflected in any of the government legislation.

We are very disappointed that Bill C-33 does not really acknowledge the situation that we are in today in Canada with respect to improving the business climate. I just do not believe that the government takes the problems that face small business seriously. That was the claim of the parliamentary secretary but I just do not buy it.

The government often claims that it stands up for the little guy. I do not know how many times I have heard that over the years, many times. If the government were here to stand up for the little guy, it would not ignore the testimony of dozens of people who face these productivity challenges every day.

There are 1.2 million unemployed people in Canada today. I would argue that if for no other reason we must start to address the productivity problem so that we can start to help those people. What does a productivity problem mean to the average person? It means that if the economy is not moving at capacity, if the government is not taking the steps necessary to unfetter business and entrepreneurs so that they can go about making more money for their businesses, expanding their businesses which leads to hiring more people and leads to rising incomes, if we cannot take that problem seriously, then the government should pack it in. It should give up.

That is fundamental to what a government is supposed to do. A government is supposed to make public policy decisions that address the biggest problems that face the country today. One of the biggest problems we have is 1.2 million unemployed people.

In many regions of the country that is a big number. It is in some ways so big that it masks the problem at a local level. In some regions of the country, Atlantic Canada, the northern regions and various rural areas, unemployment is through the roof. When unemployment is through the roof, there are all kinds of social ills that follow.

Unemployment is also a serious problem in parts of the country, such as Atlantic Canada. In some areas of Newfoundland there is 20% to 25% unemployment. We have to be aggressive in addressing these problems.

As my colleague from Peace River said the other day, the government is sleepwalking toward mediocrity, and that is what we are doing in Canada today by failing to address this.

The parliamentary secretary in his speech today said that the government has been running surpluses and that it is a great thing. Yes, it is a great thing but the problem is that the government is not managing the surpluses in the proper way. I want to give an example of what I am talking about.

Since we started to run in the black the government has spent an inordinate amount of money on all kinds of things that do not produce a more productive economy. Witnesses who appeared before the finance committee talked about this. I have forgotten which witness it was, it might have been Dale Orr, but one of the witnesses said that about 25% of all the spending the government has done since we have gotten into the black has been on things that are productivity enhancing. In other words, 75% has not been. Now some of these things we have to spend money on, even though it does not necessarily strengthen the economy or cause more jobs to be created and those kinds of things, but to see that kind of a skew tells me something, which is that the government's spending is way out of balance.

The situation that arises when so much of that spending goes toward things that do not cause the economy to be more productive, create more jobs and generate more revenues for the government, is that eventually the surpluses get smaller and smaller because businesses are not getting the breaks that allow them to compete so that they can create the jobs that create more revenues ultimately for the government. The problem with that is that as we move toward that demographic wall that we will hit in a few years when baby boomers start to retire, we will put a huge strain on our social programs.

We had all kinds of witnesses come before the finance committee and talk about that and about the need to deal with this problem now. If we do not start to manage the size of the surpluses now and broaden the tax base so that we have more income coming in down the road, then we will not be able to deal with it at that time. In other words, we cannot address it when it happens. We have to start addressing it 10 years ahead so that our surpluses are big enough to fund those social programs down the road.

This may be counterintuitive for some people but for me it makes sense that one of the most important ways to do that is to cut taxes. People will say that if we were to cut taxes that would mean a lot less revenue would be coming in. I have heard that argument from members on the government side but even the government has had to acknowledge in the last couple of years that when it brought in its tax cuts, which were very tepid in my opinion, revenues went up.

We saw that in the annual financial report this year where we had finance officials expressing surprise that corporate taxes were going up and had gone up dramatically even though corporate taxes had been cut. That is not counterintuitive to me. That makes sense because all of a sudden these businesses have the capital that allows them to expand which then helps them to generate more profits. It also means that they hire more people because those people go out and gather more business for them or produce more for them and ultimately make them a profit, and of course those people who were hired pay more taxes too.

Ultimately we get the virtuous circle that the member spoke of. I would like to argue though that the government often confuses a virtuous circle with wandering in circles, which I think is what it does a lot of the time. My point is that one of the ways the government can deal with this looming demographic crunch is to begin reducing taxes in a strategic way so that the economy becomes more productive.

I have used the word productive many times today, but this is not about working more hours every week. This is about ensuring that businesses have the capacity to buy state of the art equipment that will allow them to produce more and do more. In doing that it will allow them to compete with the Americans, the Japanese, the British and the French, all of the people we have to do battle with every day in the world of business. We need to have the capacity to buy that equipment, buy that knowledge in some cases, and buy services from people in order to compete.

As I said, this is not about working more hours. Canadians work very hard. We work as hard as anybody else. It is just that bad public policy decisions have deprived us of the ability to buy the equipment and obtain the knowledge and the skills that are necessary to compete.

Without that, it means that our standard of living will remain about 15% lower than that in the United States. It never used to be that way. We never used to have a big gap in unemployment either. We never used to have a big productivity gap. We used to be on a par with the United States. We saw that reflected in our currency a generation ago. However that has all changed, notwithstanding the rise and now the sinking of the dollar. My point is simply that we must start to reduce taxes.

The parliamentary secretary talked a bit about taxes so I started to make a list of the taxes that people in Canada pay. Sometimes we forget how many different taxes we pay. In Canada today we pay personal income tax, corporate tax, goods and services tax, capital gains tax, capital tax and excise tax. In fact we pay the GST on excise tax on fuel. We pay surtax, property tax, sales tax and payroll tax. We also have to pay various sundry fees and levies of all kinds. For example, to get a passport we have to pay for it. We have hundreds of user fees in Canada on top of all that.

What this boils down to is that 49% of the income of a family earning the average income in Canada today goes toward taxes according to the Fraser Institute. If we set aside the productivity argument for a moment, and think about what that does to a family that is trying to save money to send their kids off to university, or save money for their retirement, or to buy a home, how do they do it when half of their income is eaten up by taxes? The problem is getting worse.

The Fraser Institute produces a study every year which determines when tax freedom day will occur in Canada, which is the day in the year after which people start working for themselves and before which every cent they earn goes toward government. We have to work more days in a year now to pay taxes when it should be going the other way.

We have a serious problem, not just on the productivity front but we have a serious problem when it comes to ensuring that people have enough income to look after their own needs. It is at the point now where people pay more in taxes than they do for food, shelter and clothing. That is absolutely crazy.

I am not going to suggest the government does not need some revenues for important programs. We think it does. We think there should be some smart spending, such as some spending on defence for instance. However we also argue that the government has let spending get out of control.

Since 1997 we have seen spending on programs go from $106 billion to $150 billion now. Spending in the last number of years has gone up an average of 5.7% a year. That is simply unsustainable. Revenues have gone up a fraction of that. Revenues have not gone up nearly as quickly as spending has gone up.

We will run into a problem down the road when we start dealing with the demographic crunch and trying to find ways to ensure we can look after people when they hit those retirement years.

I appreciate the parliamentary secretary making his case for the bill. I do not want to argue on the bill, but I do think the government could have done so much better. It could take this problem seriously.

We have had many witnesses allude to the problems that we have in Canada today because we do not address this issue. That concerns me. It tells me that the government is guilty of what it has been accused of, which is that it dithers. It does not grapple with problems in a serious way. I want to argue that it is time for Canadians to think about another option, which of course is to look across the aisle at the Conservative Party. I want to argue that it is time for a new approach, an approach that takes this problem seriously.

We believe personal and corporate taxes should be cut and that we should get rid of the capital tax and take a look at capital gains. Capital tax is destructive and it has to go. We think this is a way to begin dealing with the many problems that I have talked about.

We need to unleash the potential of the Canadian economy and give people hope, people who, in many cases, have lost hope after years of not being able to find a job or who live in a region that is chronically in the doldrums or in places where industry will no longer locate. We need to turn that around.

The only way to do those things is to make those public policy decisions that allow businesses to compete, entrepreneurs to start businesses and individual Canadians to begin fulfilling their dreams. Canadians need to find jobs in order to look after their families, save some money and buy a house. Those are very common dreams that people have and they should be attainable in a country such as Canada, but for too many they are not, which is regrettable.

For that reason I hope that the government will heed our words on this side with respect to these issues that I have raised. We also hope that Canadians will heed this as well and put pressure on their government and also consider their options when we get to that next election. We know that is probably not very far away.

Again, in the Christmas spirit, I want to wish my colleagues a merry Christmas and a happy new year. We look forward to seeing all hon. members in the new year.

Mr. Speaker, I always enjoy the member's commentary. It is very important for members to put an opinion on the floor that allows others to differentiate themselves. The member has ably labelled the Conservative Party as, let us have tax cuts for our friends and let us anticipate revenue and if tax cuts are given then good things will happen in the economy.

It is a good wish but Brian Mulroney, the Conservative prime minister, found out what happens when a government makes tax cuts but does not take care of other things like paying down debt. As an example, he introduced a $100,000 capital gains tax exemption that was not even grandfathered. It was not even for prospective gains. This was $100,000 freebie to people who had holding gains of $100,000. Then of course it disappeared.

During the Mulroney years, the last Conservative years of government, no debt was paid down and in fact the record is clear that the national debt went up. The difference between the Conservative Party and the Liberal Party is that in good times we must pay down some debt, as well as give some tax cuts, as well as deal with programs and the needs of people.

Yesterday the Governor of the Bank of Canada was asked a question about how we should deal with the looming demographic of Canada which will hit the fan, as it were, down the road. He said that we should deal with that by paying down debt at a reasonable basis and that a target of 25% debt to GDP ratio should be able to generate the savings on interest expense, which is the single largest expenditure of the Government of Canada. Therefore, when the baby boomers reach retirement age the savings would deal with that bubble that the member talked about. That is a responsible strategy.

The difference here is do not anticipate revenues but to deal with not only tax cuts but also good, solid, responsible social programs and debt repayment. It is a balanced plan.

Mr. Speaker, I was elected to this place 11 years ago on a platform that called for balanced budgets, and ultimately for tax reductions and for paying down debt. These were the things on which I was elected in 1993. The government said that if we did those things, we would slash and burn and people's jobs would be lost. Ultimately, the Liberals were forced to do it. They were forced to admit they were wrong, and they are wrong right now.

I point out to the hon. member across the way that the government was forced again in 2000, when we ran on a platform of cutting taxes. The Liberals said that we could not do that, then they brought in their own tax cuts. They said at the time, when they were attacking us, that it would cause them to not have revenues to coming in. However, when they cut taxes, more revenues came in.

The member says that we cannot anticipate revenues. How do we plan spending down the road, then? If we cannot anticipate revenues, we cannot have any plans into the future. Pretty obviously, we have to anticipate spending down the road. The question is, how do we do it? Do we do it the way the government has done it? Do we try to hide the size of the surpluses, which is what the government has done for a number of years? In fact, over the last five years, the government has underestimated surpluses by $30 billion, not including the end of the year spending it has done, which was not budgeted. It is probably closer to $60 billion.

When the hon. member across the way talks about being unable to anticipate revenues, I agree that members on that side do not do a very good job of it. However, there are ways to do this and a responsible government would do some of those things we have recommended.

Mr. Speaker, I want to thank the Conservative member for his kind words and his accurate analysis of the measures that are presented to us.

I wonder if he could also comment on what I will say about the federal government's debt. Is it not true—and the public should remember these facts—that the Mulroney government inherited a precarious budgetary situation, because it came to office after we had had several Liberal governments? The first major deficits were incurred by the former Prime Minister, who was a former Minister of Finance, Mr. Chrétien. So, when the Conservatives came to office, they found themselves dealing with a situation that had been created by the Liberals, in addition to having to deal with two major recessions under your government.

Mr. Speaker, my friend from the Bloc is absolutely correct. There were a string of deficit budgets under the Trudeau government. For a number of years, the Liberals ran up the debt to I think around $180 billion before Brian Mulroney's government took over. It was an unmitigated disaster at the time, and that is why they were thrown out.

It is true that the Conservative government of the day was unable to make as much progress as it would have liked. It is also true that the genesis of the problem started with Liberal government overspending.

For the benefit of my Bloc colleague, he is a champion of pursuing the concept of fixing the fiscal imbalance in Canada today. I want to applaud him for his work on that. He has done a great. I look forward to working with him in the new year when the finance committee tackles that issue.